Metro Bank cuts flotation target to £400m

Metro Bank cuts flotation target to £400m

Challenger bank Metro Bank has cut its flotation target from £500m to £400m in the face of market turbulence and the rout on bank stocks.

The high street lender cut back the amount it intends to raise from £500m to £400m, offering new shares at £20 per share instead of the original price of £24.

The move means Metro Bank's expected value will come in significantly lower, knocking it back from around £2bn to £1.6bn.

Its listing on the London Stock Market has also been delayed until March, according to reports.

The cut comes as volatility has swept through financial markets in recent weeks, with investors punishing banking stocks amid fears some heavyweight lenders do not have the capital to withstand a slowdown in global growth.

Vernon Hill, the bank's chairman, told The Times he cut the price after "the bottom fell out of bank stocks at the beginning of the year", while the board had also considered pulling the plug on raising capital altogether.

He said the bank would press ahead with the flotation because it was already "far down the road".

The lender unveiled narrowing losses at the end of last month, with the underlying figure after tax hitting £10.1m in the fourth quarter to 31 December last year, compared with losses of £10.7m in the third quarter of 2015.

It also said in the trading update in January that lending to business and personal customers had more than doubled in 2015, hitting £3.5bn in its fourth quarter.

The bank - which employs more than 2,000 people and has 40 branches across London and the South East - confirmed last month that it would open another nine branches this year, including sites in King's Road, Chelsea, Bexleyheath and Wimbledon.

Metro Bank was the first new high street bank to enter the industry for 150 years when it launched in Holborn six years ago.